optionMONSTER's Depth Charge system shows that a trader bought 3,000 January 60 puts for the ask price of $1.50. The volume was twice the strike's open interest before the session began, clearly showing that this is a new position.

Less than a minute later, a block of 30,000 CAT shares was purchased for $89. The delta of the options was -0.1, so this would make the overall position market-neutral and thereby focused on volatility rather than the stock's direction. (See our Education section)

CAT is up fractionally today at $89.19. The construction-equipment giant gapped higher on the first day of the year and tested resistance just below $100 at the start of February, but it has been falling since.

More than 24,500 CAT options have already changed hands today, compared with a full-session average of 15,440 in the last month.

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.

OptionsHouse is separate from but affiliated with optionMONSTER®. Both are subsidiaries of Aperture Group, LLC.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

optionMONSTER's reference to specific securities should not be construed as a recommendation to buy or sell that security. Specific securities are mentioned for informational purposes only.